Newspaper article The Evening Standard (London, England)

Sony Wins Epic Battle for Hollywood's MGM

Newspaper article The Evening Standard (London, England)

Sony Wins Epic Battle for Hollywood's MGM

Article excerpt


HOLLYWOOD studio Metro-Goldwyn-Mayer is to be bought by a partnership led by Japanese entertainment giant Sony in a deal worth some $4.8 billion ([pounds sterling]2.7 billion).

The Sony group beat Time Warner to the prize after months of negotiations.

In a day of drama, the deal was concluded only after Time Warner withdrew its bid at the last minute.

The revised price values MGM at $12 per share, an 8% premium to its Friday closing price. The deal comprises $2.8 billion in equity and a further $2 billion in assumed debt.

Time Warner, the world's biggest media group, is believed to have offered $4.6 billion and only walked away from the deal after Sony sweetened its offer.

Formed in 1924, MGM became famous in the 1930s and with such epics as Gone with the Wind and The Wizard of Oz, under the watchful eye of Louis B. Mayer.

More recently, it fell into the control of legendary investor Kirk Kerkorian, who will net $2.1 billion from the sale - almost $1 billion more than he paid for it in 1996.

The modern MGM makes low-cost, low-risk movies and TV shows, but the jewel in the crown is its library of more than 4000 films which include the James Bond, Pink Panther and Rocky series.

These alone could generate more than $400 million in cashflow in 2004 on the new DVD format.

Sony, which bought Columbia/Tri-Star pictures in 1989, is now thought likely to approach Comcast for a distribution deal for its new archive.

Sony Entertainment is teamed with Providence Equity Partners, Texas Pacific Group and DLJ Merchant Banking Partners.

There has been friction within the group over the internal terms of the deal. However, this have now been resolved, with insiders saying that Providence would put in cash of $450 million, Sony and Texas Pacific $300 million and DLJ Merchant Banking $250 million. …

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